In the realm of Scientific Research and Experimental Development (SR&ED), different types of research serve distinct purposes, each contributing uniquely to scientific and technological advancement. Here’s a breakdown of the key types: 

  1. Basic Research is driven by curiosity, explores fundamental scientific principles without specific practical applications. Scientists aim to expand our understanding of the natural world and uncover underlying principles governing various phenomena, forming the bedrock of scientific discovery and laying the foundation for future innovations.
  2. Applied Research uses basic research findings to solve real-world problems and develop new technologies. It has practical goals, aiming to improve processes, products, or systems, and provides direct tangible benefits to industries, society, or the environment.
  3. Experimental Development focuses on the practical applica17tion of scientific and technological knowledge. It involves systematic efforts to create new products, processes, or to improve the existing ones. This research aims for technological advancements, involving prototyping, testing, and refining to bring innovations to market readiness.

Why It Matters  

The above are the identified types of research and development that qualify for the Scientific Research and Experimental Development tax incentives program. This program allows you to: 

  • Claim a deduction against income 
  • Earn an investment tax credit (TC) 

Understanding what you are doing and how/if it qualifies will help you determine how best you can prepare for a claim and getting money in your pocket. This includes proper and appropriate project documentation to support your claim during an audit.

Want to learn more, you can search our other SRED blogs, visit CRA’s SRED website: https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/what-are-sred-tax-incentives.html or contact us for more information.